Do we currently need more federal, state and local government spending or less? Why?
Who is we? there are a few federal countries in this world. Germany and the USA come first to mind.
Less, less, and less. Big Government has gotten us in the shape we are in. Spending money that they do not have. Therefore, Going farther and farther in debt as I write this. I think they need to do away with earmarks "PERIOD>" Also Lobbyist. Yes, lobbyist who coerce politicians into making decisions favoring the lobbyist Companies interest. Do away with all of this nonsense and get us "The American People" out of this mess!! We NEED a bridge going to 'Somewhere Again!!"
Lobbyists and earmarks can definitely take a hike. I would like to see us build that bridge by cutting military spending, create jobs and hire some workers to build the bridge, and by the wealthiest paying more taxes to help pay for the bridge.
Short term stimulus on the fiscal side never works for mutliple reasons. As Dr Milton Friedman pointed out, fiscal stimulus can only cause an artificial increase in demand. This means that business owners recognize this as transient income that is non-sustainable and will not commit substantial resources to any long term capital expenditures. In fact it is having the opposite effect. Capital investment is simply on strike out of fear of the costly tax burden all of the stimulus will eventually cause.
Secondly, even if you could get the capital expenditures stimulated through gov't enduced increases in demand, you would have to have great efficiency in the direction of how this spending is targeted. As we have seen in the last nearly 900 billion dollar stimulus. There were no shovel ready jobs. Politicians are not altruistic and will simply direct the funds to places that will benefit only their friends. Most of the stimulus went to either fraud or reinforcing already out of control state and local budgets. The local muncipalities were supposed to use this cash infusion as a means to buy time and fix their budgets. They ofcourse did not. They simply continued the status quo. When the stimulus ended they were forced to make dramatic cuts anyway. It's the equivalent to giving more money to a drug addict, and asking them not to buy drugs. The only thing that stimulates capital investment is tax friendly policy. Capital goes were it is most welcome, and capital stays where it is treated best.
Who treats capital best? Is it individuals spending it to help get the economy rolling or is it banks and businesses keeping capital in their pockets after getting tax cuts? Tax incentives work for all of us if they are put back into the economy.
Business tend to hord capital when they fear higher taxes to be imminent. Tax policy needs to be friendly enough that it makes capital investment more attractive on an after tax basis than simply keeping excess reserves in the corporate treasury.
I think it is fairly obvious that more government spending is not the answer to the problems our modern societies face. On the other hand simply cutting off funding to government agencies doesn't make for less government but more bad government, which is the last thing our country (the US) needs. The obvious answer is to reduce the amount of unnecessary duplication of services, rules, and regulations that all too often are at odds with each other between local, state, and federal governing bodies. In my lifetime I have watched both political parties attempt this in one form or another without much success. I agree with jThomp42 in that the influence of lobbyists has gotten way out of hand and is one of the main reasons government continues to expand at the expense of the people it is supposed to serve. The stranglehold these special interests have on our government continues to stifle any attempts at the true reforms we so desperately need.
I agree that special interests are a problem. What's "best for the country" requires each politician to do a straw poll with lobbyists rather than their constituents. Perhaps we should stop voting against our own interests by re-electing them?
And there in lies the rub. It doesn't matter who gets elected, the same lobbyists will be there waiting for them. Look what happened to John McCain in 2000. He wanted to put controls on lobbyists so they cut his money off; we got George Jr. instead.
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please explain anyone explain how government spending can help the economy get out of a recession ?
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